By jimmy vielkind, Capitol bureau

Published 10:35 pm, Saturday, December 3, 2011

ALBANY — It seems only natural that Gov. Andrew Cuomo would start inching toward tax increases next year, something members of the Assembly will discuss in a hastily called conference Tuesday.

Riding an electoral honeymoon and buoyed by a coalition of business interests that spent millions supporting him, the governor was able to fend off pressure from fellow Democrats on his left flank during the last budget debate, which concluded April 1, to renew a tax on New Yorkers reporting over $200,000 in income.

But a lot has changed since the spring. Occupy encampments in Albany and New York have taken over the headline space previously devoted to tea party rallies. The economic outlook has not improved, and the state's own fiscal projections have worsened.

Also in New York, the monetary power players on the fiscal left — unions — have spent months organizing and coordinating. Last year, some unions and their allied groups extended their desire to be friendly with Cuomo to non-engagement over the extension of the tax surcharge.

No more. "Right now we have an opportunity. We have a different environment. We need to reassess what we're going to be doing," said Sen. Gustavo Rivera, D-Bronx.

Unions say they have drawn new life from the Occupy protests. A new coalition called 99 New York, comprised of earlier umbrella groups such as A Strong Economy for All and New Yorkers for Fiscal Fairness, have joined forces with the Working Families Party. The new effort has spent the summer and fall organizing, according to Michael Kink, executive director of A Strong Economy for All.

That backdrop could be a stark change from last February, when Cuomo unveiled a budget that didn't renew the surcharge on top earners. He was provided with cover from the Committee to Save New York, a coalition of real estate magnates and business groups that pooled $10 million for television and mailed advertisements supporting the governor's position.

Cuomo had also neutralized portions of the left coalition. The Working Families Party cross-endorsed the Democrat, who polls showed was a heavy favorite to win. By doing so, they got the 50,000 votes necessary to keep their ballot line. Hoping to avoid the awkwardness of opposing a key point of the man they had just endorsed, the party sat out the budget fight.

So did the health care workers union SEIU 1199, which ended up spending $6 million in support of the budget. Its leaders participated in a Medicaid Redesign Team that secured a pledge to cap, but increase, health care spending in this year's plan.

Now, the Working Families Party has organized marches and rallies supporting Occupy Wall Street, along with 1199. Members of PEF were urged to knock on doors around the state Saturday in coordination with Kink's group. Last week, CSEA President Danny Donohue said "Cuomonomics" is "indefensible." (A union spokesman says this rhetoric is nothing new, but was simply revived as municipalities struggle to develop budgets under the new Cuomo-sponsored cap on local property taxes.)

Kink said the public mood had changed. "The idea that you could gather a war chest from the top one percent (of income earners) to run TV ads saying we need tax policies favoring the top one percent seems more outrageous now than it did last February or March," he said.

He pointed to the Occupy protests as a game-changer, something Cuomo has rejected. But Albany's demonstrators, by camping in a public park, caught the attention of the news media and have managed to remain in place with the sufferance of local officials. The protesters have attacked Cuomo and coined a sticky new moniker: Governor One Percent.

Still, there has not been an appreciable change in poll support for income taxes on higher earners, either those reporting more than $200,000 in income, as the current law allows, or more than $1 million. According to Siena Research Institute spokesman Steve Greenberg, polls find between two-thirds and three-quarters of voters surveyed support the tax — including a majority of self-indentified Republicans.

Bruce Gyory, an adjunct professor of political science at the University of Albany and an adviser to three governors, the Occupy movement has "dramatically affected the mood and priorities of moderate, independent voters in the middle. They're acting as cue balls in a billiard game, and the real question is which pocket the eight ball of independents drops on the table."

It seems Cuomo has begun to line up his shot. He promised unequivocally not to raise taxes during his campaign, but over recent weeks his rhetoric has started to soften.

After arguing with a full throat that he couldn't renew the taxes because they would drive businesses across state lines, Cuomo started parrying questions about the tax by noting his support for such a measure on the federal level. He began earlier last month to talk about the current budget problem, which could be alleviated with an estimated $4.6 billion a year from renewing the current surcharge, in the context of job creation.

During a private meeting in October with black and Hispanic legislators, Cuomo answered concerns about the tax — which has strong support among that group — by bringing up the idea of restructuring the tax code. Those conversations continued with union leaders and others, and Cuomo admitted them last week during a radio interview.

"If you use the tax code right, it's a potent economic generator. If you use it incorrectly, you can stifle business," he said.

Spun and packaged correctly, Cuomo's tax package could provide him with a detour around a second round in the battle over the millionaires tax. He could re-align himself with progressives on the tax issue — as he did by pushing for same-sex marriage last June — while ameliorating conservatives on issues like stripping away government mandates and paring pubic employee pensions.

In what will likely be a preview of his upcoming major speeches, Cuomo phrased it this way last month: "It's about the fairness. ... Everyone is feeling it and what they are saying is, 'I want fairness and I want someone who is talking to me and who is helping me and I want fairness because I am suffering.' Fairness — millionaires tax. Fairness — how are you helping the poor people? Housing subsidy programs — fairness. How about the homeless? Fairness. So that's what it is really all about."